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Home building at historic levels in some cities

Cities that are leading the nation in home building have land available for development, pent-up demand for housing, and strong economies and job growth.

Workers build walls of a new home at a housing development in San Mateo, California. The Commerce Department reported Friday that new home construction was up 18% in 2013 from the year before. (Photo by Justin Sullivan/Getty Images) ORG XMIT: 166911614 ORIG FILE ID: 166751411(Photo: Justin Sullivan Getty Images)

Story Highlights

Texas cities lead the way in terms of single-family home construction

Builders still wary of metro outlying areas where prices fell sharply

Multifamily construction is keeping builders busy in San Francisco and Boston

Home building is recovering faster in some cities than in others, just as home prices are.

Major cities in Texas are leading the way back in single-family home construction, while Western cities hit hard by foreclosures still lag, research shows.

Big cities back to 30-year average levels of single-family home building include Houston, Austin and Raleigh, N.C, show data from John Burns Real Estate Consulting. It compared permit activity for the 12 months ended in November to the 1980-2012 period.

Other major cities close to historic levels include Nashville, San Antonio, Dallas and Jacksonville, the data show.

If multifamily construction is counted, add San Francisco, New York, Seattle, Boston and Miami to the list of cities that are back to or beyond their historic building levels, according to a Trulia analysis of 2013 building permits, vs. historic averages.

The cities that are bouncing back the strongest tend to have land available for building, pent-up demand for housing, generally strong economies and good job growth, economists say.

The Texas economy, while slowing late last year, grew 3.7%, vs. 1.9% for the national economy, estimates Moody's Analytics. Single-family home building in the state leveled off late in the year but should pick up, given low inventories and good job and population gains, Moody's says.

The economies of Raleigh, Nashville and Jacksonville last year also outperformed the national economy, Moody's says.

Texas also has land suitable for home building. That's not true for many other areas, given a dearth of land development following the housing bust.

Some cities, such as Phoenix, have experienced a shortage of lots. Builders have yet to return to outlying areas "because they got burned there so badly" in the housing bust, says economist John Burns.

For the 12 months ending in November, Phoenix single-family home builders obtained permits for just half the number of homes they averaged per year in the past three decades, Burns' data show.

Home building has been even slower to recover in Los Angeles, Sacramento and Riverside, Calif. — areas that experienced heavy overbuilding leading up to the housing bust.

Some cities have surpassed their historical building norms because they weren't badly overbuilt before, says Jed Kolko, Trulia chief economist. Austin, Raleigh and San Francisco are in that camp, Burns says.

Much of the rebound in places such as San Francisco, Seattle, Boston and Miami has to do with multifamily construction, Kolko says. Last year, multi-unit buildings accounted for a majority of new permits in San Francisco, Miami and Austin, he adds.

While some major cities have returned to long-term historical averages for single-family building, they're still far below peak levels for construction since 2000.